top of page

By:

Rashmi Kulkarni

23 March 2025 at 2:58:52 pm

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven....

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven. People have built their own ways of keeping work moving. It’s not perfect, but it’s familiar. When you introduce a new system, a new rule, a new “professional way,” you may be adding order but you’re also removing something  they were using to survive. And humans react more strongly to removals than additions. Behavioral economists Daniel Kahneman and Amos Tversky called this loss aversion where we feel losses more sharply than we feel gains. That’s why your promised “future benefit” struggles to compete with someone’s immediate fear. Which seat are you stepping into? Inherited seat:  People assume you’ll change things quickly to “prove yourself”. They brace for loss even before you speak. Hired seat:  People watch for hidden agendas: “New boss means new rules, new blame.” They protect themselves. Promoted seat:  Your peers worry the old friendship is now replaced by authority. They fear loss of comfort and access. Different seats, same emotion underneath: don’t take away what keeps me safe. Weighing Scale Think of an old kirana shop. The weighing scale may not be fancy, but it’s trusted. The shopkeeper has used it for years. Customers have seen it. Everyone has settled into that comfort. Now imagine someone walks in and says, “We’re upgrading your weighing scale. This is digital. More accurate. More modern.” Sounds good, right? But what does the shopkeeper hear ? “My customers might think the old scale was wrong.” (loss of trust) “I won’t be able to adjust for small realities.” (loss of flexibility) “If the digital scale shows something different, I’ll be accused.” (loss of safety) “This was my shop. Now someone else is deciding.” (loss of control) So even if the new scale is better, the shopkeeper will resist or accept it politely and quietly return to the old one when nobody is watching. That is exactly what happens in companies. Modernisation Pitch Most leaders pitch change like this: “We’ll become world-class.” “We’ll digitize.” “We’ll improve visibility.” “We’ll build a process-driven culture.” But for the listener, these are not benefits. These are threats, because they translate into losses: Visibility can mean exposure . Process can mean loss of discretion . Digitization can mean loss of speed  (at least initially). “Professional” can mean loss of status  for the old guard. So the person across the table is not debating your logic. They’re calculating their losses. Practical Way Watch what happens when you propose something simple like daily reporting. You say: “It’s just 10 minutes. Basic discipline.” They hear: “Daily reporting means daily scrutiny.” “If numbers dip, I will be questioned.” “If I show the truth, it will create conflict.” “If I don’t show the truth, I’ll be accused later.” In their mind, the safest response is: nod, agree, delay. Then you label them “resistant.” But they’re not resisting change. They’re resisting loss . Leader’s Job If you want adoption in an MSME, don’t sell modernization as “upgrade”. Sell it as protection . Instead of: “We need an ERP.” Try: “We need to stop money leakage and order confusion.” Instead of: “We need systems.” Try: “We need fewer customer escalations and less rework.” Instead of: “We need transparency.” Try: “We need fewer surprises at month-end.” This is not manipulation. This is translation. You’re speaking the language the system understands: risk, leakage, blame, customer loss, cash loss, fatigue. Field Test: Rewrite your pitch in loss-prevention language Pick one change you’re pushing this month. Now write two versions: Version A (your current pitch): What you normally say: upgrade, modern, efficiency, best practices. Version B (loss prevention pitch): Use this template: What are we losing today?  (money, time, customers, reputation, peace) Where is the leakage happening?  (handoffs, approvals, rework, vendor delays) What small protection will this change create? (fewer disputes, faster closure, less follow-up) What will not change?  (no layoffs, no humiliation, no sudden policing) What proof will we show in 2 weeks?  (one metric, one visible win) Now do one more important step: For your top 3 stakeholders, write the one loss they think they will face  if your change happens. Don’t argue with it. Just name it. Because once you name the fear, you can design around it. The close If you remember only one thing from this week, remember this: A “good idea” is not enough in a legacy MSME. People need to feel safe adopting it. You don’t have to dilute your standards. You just have to stop selling change like a TED talk and start selling it like a protection plan. Next week, we’ll deal with another invisible force that keeps companies stuck even when they agree with you: the status quo isn’t a baseline. It’s a competitor. (The writer is CEO of PPS Consulting, can be reached at rashmi@ppsconsulting.biz )

Unbroken Shrine

Few buildings in India carry as much historical sediment as the Somnath temple on Gujarat’s wind-scoured coast. It has been smashed, rebuilt, looted and restored so many times that it has become less a shrine than a ledger of the subcontinent’s civilisational fortunes


Prime Minister Narendra Modi, speaking at the recent ‘Somnath Swabhiman Parv,’ captured that essence with unusual clarity. The ‘Shaurya Yatra’ - a ceremonial procession organised to honour those who laid down their lives defending the Somnath temple in Gujarat’s Gir Somnath district – saw thousands joining in.


When the PM said that the flag flying over Somnath today shows India’s power to the world, he was not boasting but stating a fact that has been politically inconvenient for decades.


Nothing captures this inconvenience better than the first Indian Prime Minister, Jawaharlal Nehru’s refusal to attend Somnath’s reconstruction in 1951. While Sardar Patel and thousands of ordinary Indians rebuilt the shrine from rubble, Nehru kept his distance, uneasy with a symbol that contradicted his imported modernist vision of India. To Nehru, Somnath was an awkward reminder that India’s past could not be neatly separated from its faith. To Modi, it is proof that faith and identity are what allowed India to survive conquest.


From Mahmud of Ghazni in 1026 C.E. to Aurangzeb six centuries later, Somnath was not assaulted merely because it was rich but because of its distinct symbolism. It was one of Hinduism’s holiest shrines, a jyotirlinga of Shiva, perched defiantly on the western edge of India where traders, pilgrims and ideas had converged for over a millennium. To destroy it was to announce domination over a civilisation.


Ghazni understood this. Persian court historians such as al-Utbi did not describe his raid as a robbery but as an act of iconoclasm, a holy war against idolatry.


Later rulers followed the script. When the Delhi Sultanate expanded into Gujarat, Somnath was again attacked by Alauddin Khalji’s general Ulugh Khan, and later under the Gujarat Sultans, the shrine was damaged. By the time Aurangzeb’s edict ordered its destruction in the seventeenth century, the temple had become less a source of treasure than a provocation.


By reducing these repeated assaults to opportunistic looting, the Nehru-era ‘historians’ stripped them of their ideological core.


Yet, Somnath’s story is not just one of destruction, but of relentless revival. Few monuments anywhere in the world have been so systematically attacked and so stubbornly rebuilt.


The Nehruvian state tried to bury that lesson. It taught Indians to feel awkward about their own scars, to treat historical trauma as a communal inconvenience rather than a national inheritance. The result was not harmony, but amnesia which regrettably always favours the aggressor.


Modi’s Somnath speech was therefore a geopolitical assertion. In a world where China wraps itself in 5,000 years of civilization, a history-denying India would be a strategic absurdity. Nations that do not believe in themselves are easily bullied by those that do. 


Comments

bottom of page